When I was at MegaCorp, I had the opportunity to have lunch with Bob Johnson, the wildly successful founder of BET Television. Johnson was on our board of directors and I was on-hand to present an initiative at their offsite meeting.
Johnson is a dynamic character and I’ve followed him through the media for the last 10+ years. He’s not afraid to jump into politics and seems to have taken positions on both sides of the aisle, although he usually has sided with the Democrats.
Recently, he has turned his back on the progressive dream of taxpayer-funded reparations for African-Americans in favor of simple saving through 401k plans. He believes that new focus on the value of long-term investing in these retirement accounts can yield wealth growth of $600 billion over 25 years and materially close the country’s racial wealth gap …
Link: Close The Wealth Gap (FOX)
His focus is on getting poor families, who tend to switch jobs more frequently, to keep their 401K balances invested. Today, most African-American & Hispanic-American job switchers cash out their 401k balances when they leave a job for another. This means their savings are continually drained. Johnson worked with Congress to make the accounts more portable than ever, so that staying invested is troublefree.
I’m not sure what the impact of Johnson’s initiative will be, but I wanted to feature it here and give it some visibility. In a world of robbing from Peter to subsidize Paul, Johnson is pushing a program that rewards those who are working to help themselves, within the already popular & active 401k framework. Here’s hoping it really catches on.
Thoughts on Johnson’s initiative?
6 thoughts on “401k Focus”
Bob Johnson has a winner of an idea here and he has the platform to get the word out and perhaps make 401-k investing cool. Of course people in the government hand-out business will not like this, because it will take away their power.
Successfully getting the word out on this would take away one of the Left’s main arguments. The one that half the population has zero net worth, while another group has the lion’s share. The messaging needs to change for the half of the population that they need to get themselves into the saving and investing game.
Robert Woodson wrote “Fighting Poverty: Welfare vs. A Way Out” that was published by the Ripon Society. Here are some of the key thoughts. “The facts are incontestable: After the expenditure of over $20 trillion in a 50-year “war on poverty,” the number of impoverished Americans has barely budged.”
1) People must be agents of change in their own transformation.
2) Those suffering a problem should be involved in the design and implementation of its solution.
3) For poverty rooted in self-destructive behavior, substantial and sustainable results entail a restoration of values and vision.
4) We must be willing to recognize a brand of “experts” who should be trusted and supported: Those whose authority comes not from diplomas and certificates on their walls, but from the testimonies of the men, women, and youths whose lives they have touched and changed.
5) The rules of the market economy should extend to our social economy. Social entrepreneurship should be rewarded on the basis of its outcome and impact – evidenced not by how many dependents are on the rolls, but how many have been empowered to rise from dependency.
Back to the subject of 401-ks. I switched jobs often. Some of the 401-ks I participated in were real turkeys with high fees and subpar returns being the rule. These plans were sold to small businessman by insurance salesmen who were concerned mostly about commissions. I looked at a job changes as an opportunity to rollover my bad 401-k into a self-directed IRA where I could invest in mutual funds, stocks, and bonds without trading fees. It was confusing and scary the first time I did a rollover, probably because the high fee providers wanted to keep my money in their plans. After the first time, it became another chore and became easy.
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I thought you’d like Johnson’s new 401K campaign. It’s much better than his previous progressive fight for “reparations”.
I’ve actually kept my 401K $$$ at the two MegaCorps I worked at. The $$$ is invested in low-fee index funds. We rolled my wife’s 401k into a Roth IRA quite awhile ago. She only had one (from the 1990s) at a MegaCorp insurance company she worked at.
The whole reparations issue is a mess.
I never went without growing up, but my parents from the depression and war era were frugal and passed that trait to me.
I don’t spend hundreds of dollars going to Vegas or sporting events and I don’t spend gobs of money on sneakers sports jerseys or hats. I see that type of spending in those who whine over not having generational wealth.
Most wealth isn’t generational. Much is, but much comes from hard work and frugal living.
I once had an employee who asked for help with her budget. She lost the battle when she visited her “friend” the car salesman when getting her paid off car serviced. The food delivery service to her desk for breakfast and lunch didn’t help. She thought it was quaint how the boss brown bagged it. Guess who is retired!
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Your description of yourself, just described ‘The Millionaires’ who were described in the book “The Millionaire Next Door” and how they got there.
Most readers do not focus on the second half of the book that goes into great detail about why inter-generational wealth is rare, because the heirs spend their inheritance frivolously.
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A classic book with a lot of practical insights!
Unfortunately, the idea of “living BELOW your means” also seems “quaint” nowadays. I do spend $$$ on big trips, concerts, and sports, but I can pay for it all and still be “below my means”. I worry that the media and politicians are increasingly making “living ABOVE your means” fashionable, but maybe they have always been a corrupting influence.